Pension solution stabilizes rates

Source:
NYSUT United

NYSUT hailed lawmakers for modifying a pension smoothing proposal that provides school districts a solution to the temporary short-term spike in the employer contribution rates, while maintaining the integrity of the state retirement systems.

If adopted by state Comptroller Thomas DiNapoli and the Teachers' Retirement System trustees, the proposal would be an optional tool for local governments and school district employers.

School districts, which contribute to both the Employees' Retirement System and TRS, would have the choice of alternative contributions that would establish new stable pension rates. The plan could save school districts about $400 million in the first year.

For TRS, the rate would:

last for seven years,

never fall below 14 percent or rise above 18 percent,

be 14 percent for the first two years,

could increase or decrease up to 2 percent for the third and fifth years, and

in the eighth year, normal employer contributions would resume.

Payment of deferred contributions with interest would start in the sixth year. If the pension fund becomes underfunded at any time, the program would end.

For ERS, the rate would:

be 12 percent,

not change more than .5 percent up or down in a year,

not fall lower than 9.5 percent when the normal rate would be higher than the alternate rate, and

spread unpaid portions of pension payments over 12 years with interest.

TRS trustees will review the proposal at their April 25 meeting. If approved, districts have one year, starting July 1, to decide whether to opt into the alternative plan.